iPhone 6: How Will It Affect Apple, Inc. Stock Price?

Most Apple Inc. (NASDAQ:AAPL) investors are damn sure that the iPhone 6 will simply be the best smartphone ever. Of course, there are also some people who expect it to fall flat on its face. If analysts are to be believed, the iPhone 6 is all set to be a huge winner for Apple. Reports suggest that the Cupertino-based company has scheduled a major event on September 9 to unveil the device along with other products and services.

Will iPhone 6 enable Apple to keep selling more high-priced devices?

There are plenty of speculations about what the new device will offer. Will it sport a sapphire display? Will Apple increase the clock speed of the iPhone 6 to 2GHz? Mobile payments, health & fitness tracking features, increased size, iWatch – the list seems to be endless. But the biggest question in the minds of investors is whether the iPhone 6 will enable Apple to keep selling more high-priced iPhones at hefty margins, says Ed Bowsher of MoneyWeek.

Apple will launch two variants of the iPhone 6, one with 4.7-inch display and another with 5.5-inch screen. Bowsher says going for larger screens is a great move. There are many people who switched from the iPhone to Android simply because they wanted a bigger screen. With a big screen iPhone 6, Apple can defend its current market share in 2015.

iPhone 6 may eat into the iPad sales

Apple stock isn’t expensive at P/E ratio of 15, especially when it has more than $164 billion in cash. The company’s 39% gross margin in the latest quarter positively surprised many on the Wall Street who were expecting margins to decline. Moreover, the iTunes revenue rose 25%. That’s important. The iTunes revenue is going up because more people are becoming part of Apple’s ecosystem. However, one big concern is that the iPhone 6 may eat into the iPad sales. Apple has already witnessed a slowdown in iPad sales. So, now the company is very much reliant on the iPhones.

In the short-term, Ed Bowsher expects Apple stock to rise further on the excitement around the new device. Longer-term, Apple is unlikely to see a margin erosion in 2015. Historically, Apple stock has gone up by 23% on average within six months following a new iPhone launch. The only time the stock declined was after the release of the iPhone 5. The stock saw a modest rise of 14% within six months of the launch of the iPhone 5S and 5C. But that launch period was clogged with supply chain issues.